Archive through March 05, 2008

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ody

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Post Number: 2228
Registered: 10-2006

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Tuesday, March 04, 2008 - 07:47 pm:

TOP THIRTY

Captain Chaza is quite right to point out that there are huge differences to be found if one looks at the performance of these since 17 January. In an earlier post I listed the top performers, and it might have been useful if I had done so again. Here they are:

BHP +5.54%
CSL +5.99
FGL +17.38
NCM +5.30
RIO +9.66
TLS 2.65
WPL 13.26

And that is only from the 17th; if someone had picked these on the 22nd, that person would have done quite a lot better again.

So it is quite true that there was money to be made - even for someone going long - if you picked the right stocks. Anyone who did so I warmly congratulate on having made the right choice and avoiding the stocks that could have done one great harm.

The interesting thing will now be to see whether these stocks will also continue to be successful in the months to come. It is theoretically quite possible, as I mentioned the other day, that we'll actually continue to see something like two markets, i.e. in essence the resources (in the widest sense) against "the rest". Of these stocks only CSL and TLS are NOT resources stocks. It is also possible that with the way markets and economies are going these stocks will not be able to continue in the way they have done. That is, I think, one of the most interesting things to look out for in the days, weeks, and months to come.

Now, for the Captain the choice may have been easy - and I commend him on selecting these stocks, and not all sorts of potentiallly harmful ones, if this was the choice he made. Honour where honour is due!

Would I have been able to make the choice myself if I had wanted to be in the market or had somehow been forced to be in it? We are not all the same, and as I am not in any sense a true resources specialist I would have felt uncomfortable about Fortescue, which I would have felt incapable of judging. So I would have missed out on the top performer. I would also have felt incompetent about Newcrest. I WOULD have chosen BHP, RIO, and WPL. And CSL, simply because I think that that is an excellent company which I can understand and which, being in the health sector, I would have felt reasonably safe about. I would not have bought Telstra, as I have for long intensely disliked that company. So, all in all, I would have been able to identify just four of these as stocks I would have felt reasonably comfortable with.

The MAJOR difficulty I would have had is that I would probably not have wanted to own just those four stocks. So I would then have proceeded to buy others. And that is where I would no doubt have done a good deal of damage to myself. My inclination would have been to go for the "biggies", but several of them would have been well and truly in the red by now, from the top thirty (or elsewhere, for that matter).

So, personally I would undoubtedly not have made the kind of success of my choice that I am sure the Captain has, and I have no problem whatever admitting that. It is exactly because I know that the circumstances would not have suited me, personally, that I have stayed out of the market. A large army of other investors will feel the same - especially those who might have bought banks, which are often such favourites when the going gets tough, but which have performed very badly.

I am always happy to see others succeed in areas where I could not have done what they do, and am not in the least envious of their success. My own style of investing works better at other times than the present - so, yes, that is my excuse. I am not pretending to be anything other than what I am. I can't do what I can't do, and I fully concede - with perfect equanimity - that others can do certain things better.

And by the way, Captain, I found your letter interesting and to the point: I did not feel abused, and accept your letter indeed, as you yourself describe it, as "constructive criticism". The facts speak for themselves: if I had invested in the stocks listed here I could have made money. But my problem is that I would in practice not have done the right thing!

hilarius

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Tuesday, March 04, 2008 - 08:05 pm:

Recent market conditions did not suit me

Well done to any who did well

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

ody

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Wednesday, March 05, 2008 - 01:48 am:

SOME STRIKING FIGURES

How well one would have done with the biggest mining stocks recently would have depended in a major way on one's timing.

Here are the figures over 3 months, 1 month, and 1 week. Taken as such, they are very variable, and not overwhelming, especially as we come closer to the present.

Newcrest (NCM): 21.3, 7.8, 9.4 (very strong)
Fortescue (FMG): 36.2, 6.2, -7.1 (strongly weakening, recently, but very strong before)
WPL: 15.3, 14.7, -1.6 (the last week may not mean much - strong overall)
RIO: -7.4, 3.4, -0.9 (nothing very impressive to build on)
BHP: -10.3, -1.6, -0.2 (pretty weak)

Clearly the last week has not looked good for these stocks, with the exception of Newcrest.

CSL also weakening: 6.38, 2.7, -2.1.

Even so, this lot has been much better than the vast majority of the top 30 stocks, which would have lost one big money.

But whether the level of these high resources and energy fliers will be sustained from here on? Meanwhile they HAVE been good to those who bought them at the right time. No doubt about it, and I fully concede that. As I have always said, for short-term buyers, who knew how to play the market that way, the fall on 22 January offered strong opportunities. For most other types of buyers, and especially those going outside resources and energy, the market would have been a disaster, with surprisingly large losses in many, many cases.

I have already made plain why I would myself, with my limitations and inclinations, have bought SOME of these stocks, but would have overlooked Newcrest and Fortescue (at my cost), while most likely I would have bought a number of others which (even if I had included Incitec Pivot) would probably have lost me considerable money. So that is to say that this market was not for me.

It WAS good for those who chose the right stocks, provided they keep an eye on their timing.

ody

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Wednesday, March 05, 2008 - 01:53 am:

AND IN THE US:

Stocks falling on "economic woes" - BIG TIME, AND WITH NO BOTTOM CLEARLY IN SIGHT.

Spill over into our market certain, I feel, unless the US changes its mind before the bell sounds, there.

More a bell of death, it seems: "For whom the bell sounds"!

hilarius

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Wednesday, March 05, 2008 - 07:23 am:

Ody

You have on at least two occasions over-reacted with thousands of words designed to denigrate me and prove yourself right

In effect you have a licence to abuse me publicly with torrents of verbiage while I respect the right of the Forum not to be involved further, even though I have a complete answer

I need to remember that it is an honour to be crucified unfairly

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

rdumas

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Post Number: 1183
Registered: 11-2006

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Wednesday, March 05, 2008 - 08:06 am:

Caught between a rock and a hard place?

There are some very interesting links being brought up on various websites. One that one poster put forward was the following: http://biz.yahoo.com/ap/080304/bernanke_mortgage_crisis.html

Bernanke is suggesting that one solution is for all banks and other lending bodies to reduce the size of the outstanding loans for those likely to default. At first it sounds like a really stupid idea and then you have to think of how serious the problem is in the US. The defaults are so high that whole suburbs are left vacant with the 'real value' of the real estate worth far less than the value of the loan anyway.

If you are a lender and and have a borrower who owes you $400,000 who is about to default do you lower the loan to $300,000 if that brings it to a level that he may be able to repay or do you throw him out of the house and be lucky to get $200,000 in the open market. The figures used are obviously my own but are used purely for conceptual purposes. Some of the issues are discussed in the article.

I'm sure that the bank depositors and share holders would just love the bank to do either. What a dilemma.

rdumas

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Post Number: 1184
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Wednesday, March 05, 2008 - 08:25 am:

US MARKET DOWN BUT NOT OUT

I can't believe the resilience of the US market. With all of the bad economic news and the obvious problems that are headed their way they continue to defy gravity.

The IC charting software hasn't updated yet so I have drawn in the candle for the action on the S&P500 last night. As you can see it broke down through the green support level and then closed above it thus remaining above support.

If the All Ordinaries is a 'follower' I would expect that our market will probably bounce later in the day after an early fall. If the XAO can see the real economic picture for the US and the effect that will have on the global economy it will be another negative day. Either way, the US can only defy gravity for so long before the weight of their problems pull them down.

sway

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Wednesday, March 05, 2008 - 08:40 am:

Rudy,
Maybe there really is some underlying strength in US businesses after all. I refer you to my research at this thread which I updated on the weekend. http://forum.incrediblecharts.com/messages/6/1405685.html#POST132205

Sway

philr

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Wednesday, March 05, 2008 - 08:51 am:

Another top stock to have done well over the last few months is IPL up another $5 yesterday. I think the stock needs to do a split as with its current huge price its probably out of range of the average trader. You would not get much leverage with this stock and brokerage would be excessive.

However its been a very good performer in difficult times.

ipl

Phil

** Let blockheads read what blockheads wrote.
Warren Buffett

colin_twiggs

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Post Number: 3123
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Wednesday, March 05, 2008 - 08:59 am:

Rudy,
Regarding your post on Bernanke's mortgage proposal. It makes sense, but I suspect that some banks do not have the capital reserves to absorb this. The banks cultivate the image of solidity and power but in reality they are "highly leveraged institutions with relatively small capital bases". A decline in asset values of a few percent may render them insolvent.

I suspect that a few of them already are "dead men walking".

Regards,
Colin

colin_twiggs

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Wednesday, March 05, 2008 - 09:09 am:

Citigroup for example has Net Tangible Assets of $50 billion. An impressive figure, until one considers that Total Assets exceed $2.1 trillion -- a ratio of just over 2 percent.

rdumas

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Wednesday, March 05, 2008 - 09:49 am:

Hi Sway,

Thanks for sharing that. In fact I had been following your thread since you began that exercise. You are doing good work there.

The only problem is that you are attempting to measure 'real underlying strength' by measuring a movement in stocks that at this stage I believe is sentiment based. During times of strong negative and positive sentiment such as we are going through at present, the norms of fundamental analysis are thrown out of the door. How close the market's valuation is of true underlying value during these times is anyone's guess because the answers they arrive at are based on 'perceived' future earnings expectations which depend on the degree of fear or greed in the market at the time.

One could counter the above argument by saying that if the market is fearful then why is the US market 'defying gravity'. My own answer to that is to look at our market which on the surface has fallen further than the US market in spite of the fact that we are clearly in a better economic position than the US. I can only deduce from this apparent anomaly that it shows that there is a distinct difference in the personalities of our respective markets. Who is right? That will be shown once all of the dust settles but it is obvious to me that our market and the US market are reading the signs differently which only supports my argument that this market is sentiment driven and not fundamentally driven.

dug

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Registered: 07-2005

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Wednesday, March 05, 2008 - 09:52 am:

How's cat_lady going?
After all she's got a wide portfolio that she's held thru all of this.What's happening,cat_lady?Are your off beat low turnover shares holding up against your Blue Chips or is everything unbalanced?

Ody-You've stated enough times that you're glad to be out of the market,but can you give that a rest now?
Afterall you got out not solely because you read the Downturn is "gunner" come.First Time you were going overseas and last time you were dedicated your time to writing a Book.These were contributing factors,right?Personal contributing Factors.
You should realise that
a]Not everyone is in the Market with more money than they need.
b]Not everyone has so much money that they are only able to be interested in Top Liquidity Shares to get into.
c]Not everyone is Capital Gains Tax Free thru being Superannuated.

I would like to add that the Captains' Magnificent Seven were NOT the ones you picked.It's Incredibly Difficult to work out the Charlie Point of View but from as far as I can tell,his Magnificent Seven would have been Momentum Stocks gleaned from a Search of the Entire Market.He thus came up with MakeMines[MAK]as THE One to ride.Check out MAK's Chart,Ody.
Oh and by d'way it's Chart not Graph but who d'dickens am i to pick ya up on ya English.

cheers.

Even 'til Jaded.

Dig for the sake of it.

rdumas

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